Friday, June 1, 2018

Simplicity and effectiveness

Morgan Housel has this absolutely fascinating video on investing, one that is as much relevant to several other things in life itself. (HT: Ananth)

This slide may appear funny, but is profound.

People just instinctively prefer complexity. They have a problem with appreciating something which is simple. Patiently doing simple things is just not sexy enough!

In development, governments chase innovation even when there is no evidence of any innovation having made a significant dent on any of the persistent development challenges - poor learning outcomes, traffic congestion, poor property tax collection, poor primary care and public health conditions, malnourishment, social evils, leakages in government programs, poor attendance etc. Maybe self-help groups and micro-finance on small savings and women's empowerment. Nudges. What else?

Instead simply doing basic stuff like good governance, or collecting and using routine data to monitor effectively, or ensuring compliance with procedures, or diligently monitoring performance and acting on them, or making inspections, or simple prioritisation of responsibilities, and so on, all of which are most likely to have effects which outstrip those of any innovation by orders of magnitude are considered unsexy.

Maybe investing and development need a movement to go back to simplicity. A "Back too Basics" campaign?

Do watch the full presentation for it has several other very important insights. The transcript is here.